We didn’t lose the game; we just ran out of time.” – Vince Lombardi
If there’s a common complaint I hear from successful professionals and small business owners, it is that there is not enough time in the day to appropriately fulfill the heavy demands of their career and enjoy family or outside interests in their personal life. When you add to that equation the pressures of managing money to ensure their family’s security and preparing for their own retirement, the stress really piles on. In my experience, these successful individuals are quite capable investors who simply don’t have the time, or perhaps the interest, necessary to effectively research all of their financial options. This leaves them susceptible to mistakes, missed opportunities or unnecessary costs which can eat away at their retirement savings. But any thriving business executive will tell you, focus on what you do best and delegate the rest. Which is why by serving as my client’s Personal Chief Financial Officer (CFO), I strive to help them make informed decisions with their money so they can focus their time on their profession, community, family and whatever is most important in their life.
What is a Personal CFO?
Just as a thriving business hires a qualified CFO to analyze and guide its financial course a Personal CFO is a financial advisor who understands every aspect of your financial situation and helps you make smart decisions about your money throughout your life in order to drive long-term success.
Especially in today’s transitioning market, it takes a unique combination of skill, training and resources to ensure you are properly prepared for the future. And just like any other long-term process, planning for retirement goes more smoothly if you partner with your Personal CFO to identify and prioritize goals and develop a clear plan—an investment policy statement—of how you will reach those goals. While your plan cannot control market swings, it can ensure that you have considered and prepared for inevitable market fluctuations.
An essay by Mike Ervoloni, the founder of Cabot Research, a firm that uses behavioral finance to improve the performance of investment managers, further illustrates the benefits of working with a Personal Chief Financial Officer. Ervoloni writes, “Risk management is as much about emotions as it is math. Feelings of fear, anger and sadness can propel you toward risk-seeking or risk-averting behaviors, deftly overriding conscious intent. Emotions are one of many evolutionary gifts that have spurred mankind. Originally enhancing survival skills (that old fight or flight sensation), they now try to help make financial decisions—a challenge for which they are poorly calibrated.”
A Personal CFO can help you become more emotionally aware and avoid making purely emotional financial decisions. As Ervoloni notes, “When uncertainty peaks and the current path just doesn’t feel right, it’s usually the worse time to go with your gut.” In fact, behavioral finance teaches us that reviewing long-term goals can lengthen your perspective, making it less likely that you will make a hasty portfolio move in response to a market drop or negative newspaper headline.
A Personal CFO also adds value by working with your CPA, estate planning attorney, insurance professionals and bankers to manage your wealth accumulation, preservation, and transfer. While using multiple advisors affords you the benefit of broad expertise, if there’s no communication or coordination among advisors, your risk increases, putting you in danger of not achieving your goals. For example, an undiscovered overlap between 401(k) and investment accounts could leave you over-exposed to equities. Or an unfunded trust or a missing IRA beneficiary form could thwart your estate planning goals.
As a Personal CFO my job is to leverage my skills and knowledge in a way that allows others to lead the quality of life that reflects their deepest values. For some people hiring us means they have more time to spend with their family. For others it means they have more time to focus on their business and profession. And for others it means they have more time to give back to their communities or the charities that are important to them.
I consider it a great honor and privilege to serve as the Personal CFO to many successful executives and their families through the Washington D.C. area. I believe that my comprehensive and personal view of their finances has uniquely qualified me to help them with a range of issues and ultimately make a positive difference in their lives. I strongly recommend you partner with a Personal CFO in order to keep your family’s important financial matters front and center and under control, while allowing you the time you need and want to pursue a productive and fulfilling life.
Gordon J. Bernhardt,
CPA, PFS, CFP®, AIF®
President and Founder
Bernhardt Wealth Management, Inc.